This is the tricky thing.
There are various forms of medication and there are various ways of administering them. If you are thinking 'Oh f**k, this sounds messy', then yes, you are quite correct.
The easiest category is the out and out performance enhancing type of medication such as anabolic steroids (let's not get into the really interesting stuff) which is totally banned. That is nice and easy and clear cut.
Then there are substances that are considered therapeutic if used correctly within the given parameters, but are considered 'performance enhancing' (ie banned) if used outside of their prescribed use. This is the 'oh f**k' area and the bit where most people get confused / caught out.
Therapeutic medication is allowed, but only for medically prescribed purposes, in prescribed amounts for prescribed periods of time and needs to be entered into the treatment register for each and every horse (eg an anti-inflammatory, an cortico-steroid, a steroid, Lasix, etc). All these substances are medically approved and have recognised, medically approved therapeutic properties and can be used for medically approved / recognised issues. Now you get to the part where these substances also may be considered to have performance enhancing (or sometimes - such as the case in Lasix - masking) properties. And this is where things get complicated.
These substances are OK to use therapeutically (ie on medical advice, for a prescribed medical problem and for a prescribed amount and a prescribed length of time) in which case they are, in theory, permissable substances. However, these same therapeutic substances, used outside of the above mentioned parameters, can also be considered banned substances if given at the wrong times for the wrong reasons and without the requisite medical permission.
To give you an example, a recently gelded colt or perhaps one that has undergone a serious surgery, may become anaemic and require a steroid to help it recover. Prescribed by a vet, for a diagnosed condition and for a diagnosed, prescribed period of time, this would be considered perfectly OK. The same with a horse that may be given some sort of broncho dilator if it is struggling with a respiratory condition.
HOWEVER, if that horse is raced before the allotted elimination time is up (something that should not happen), it will test positive and there would be consequences. Also, if the horse happens to test positive AFTER the prescribed elimination time, one would either need to consider that there was some sort of metabolic anomaly, or that the horse may have received an additional dose of the substance. This would fall foul of the 'in competition' rules and the trainer might be liable for a fine.
Horses are routinely checked for 'in competition' positives to ensure that they are not racing on any substances that are considered banned for racing. If you check race day Stipe reports, they usually sample the winner and then take a random sample from another runner. This is standard procedure.
However, horses may also be tested out of competition to check that they are not being given stuff - even things that may be medically acceptable - if they do not need it and have not been prescribed the treatment. This includes stable inspections and also horses that are passed through the pens. The pens testing is fairly new to me, so please treat with caution ! It seems all horses that are passed through the pens are tested. The rule originally stated that horses were not allowed to be passed through the pens with substances (such as a sedative) that might alter their behaviour. This is pretty sensible as it this would obviously render any pens certificate more or less irrelevant (if a horse is passed through the pens with a certificate on pens day, there is no guarantee it will not be a nuisance on race day with no medication). However, it seems the rule has subsequently been amended to read that horses may not be passed through the pens with ANY substance / medication, which obviously complicates things somewhat as pens days are limited and horses may be receiving treatment and essentially be 'off work' which is an ideal time to deal with administrative issues such as getting pens certificates - things which now become mutually exclusive (see the recent Adam Marcus 'positive' in which he was fined for putting a horse through the pens that had been treated with Lasix - OK for therapeutic purposes and not something that can alter a horse's behaviour in the pens, but obviously not permitted on race day, so he fell foul of the 'out of competition testing' rule, although in theory at least, he should have been safe in terms of passing the horse through the pens).
From a personal perspective, I feel that the current medication rules are far too vague and allow too much room for error. If you allow room for negotiation or ambiguity, there will always be misunderstanding as well as people trying to push the envelope. My (admittedly draconian) view is all or nothing. There is no such thing as being 'a little bit' pregnant and there should be no such thing as being 'a little bit' medicated. You either are or you are not. They should make a list of the substances that are OK and a list that are not. No grey areas and then there can be no arguments. But I'm a fairly simple minded person and I acknowledge that this is a time-consuming and expensive way of doing things.
Nonetheless, I feel the rules should be clear and they should be fair and then everyone would know where they stand.
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